A Quick Tour of Economic Issues We Should Watch Now

In a Year of Elections and of the Corona Virus, We Should Pay Attention to These Issues

Elections always bring economic issues to the forefront. These are often the issues that most separate candidates and their voters. So it is this year. But we have a new shadow stalking us at present. That is, of course, the Corona virus. We still don’t even know what we don’t know about this menace, but we can already see economic factors that must be taken into account, even as they take shape.

Here are a few of the economic big-ticket items we should be focused on at this time, in no particular order:

• The Corona Virus

  This thing is going to play havoc on the global economy. It has already started doing so, in a very big and broad way. Some industries will be hit really hard by this. Hotels, convention centers, transportation all come to mind. Cruise lines may be at risk of going out of business. For them, this is a seminal event.

  Cruise lines in particular may not recover from this. It is possible that many industries could call on government bail out help (no cost loans?) if things get really bad. A case can be made that rescues might be the right thing to do (low interest loans by government, etc.). It would be short sighted to see whole segments of the economy go under because of circumstances completely beyond their control. Others, such as video teleconferencing, will make fortunes and advance our use of such technology.

  Besides, we want them to help feed the economy on the rebound. But the cruise lines present a thorny problem. Most are registered not in the US, but in places like Liberia, to avoid taxes and regulations. It’s not clear they should expect any US Government help, even if their loss as an industry affects others, like suppliers. Tough questions to be answered yet.

  The virus, of course, is about much more than economics. It is dominating the world’s consciousness at the moment. But the incredible mismanagement of this crisis by the Trump administration is manifesting itself over and over in economic penalties, among others.

• The Living Wage Debate

  This comes up in every election, of course. While the idea of a standard living wage nationwide is problematic, a decent minimum standard should not be out of reach. Suffice it to say that for me, anyone working a 40 hour and still qualifying for public assistance is underpaid. You and I are underwriting the business costs of such an employer, and that is wrong. That the national minimum wage is STILL $7.25 an hour is a disgrace. I would not want to support any candidate who did not favor a national rate pegged at $15/hour as a baseline (could go up or down locally, but not much), with annual cost of living indexing.

  Paying a living wage is good economics, good morals, and good business. Expecting businesses to do this without the underpinning of legislation puts the business trying to do the right thing as a competitive disadvantage. What we have now looks like something out of the Dark Ages. Shape up, America.

• Medicare/Medical Costs 

  You may have heard some discussion on this one? We could actually make some progress perhaps, but Sanders’ maddening choice to either ignore costs or to cite varying costs is not helping. I think the odds of passing something like Medicare for All Who Want It (Thanks, Mayor Pete) and laying a path to more of a single payer system over not too much time are pretty good if the Democrats sweep the elections.

  The underlying mood seems to be that people want universal coverage but want some options on how to do that and a transition path. If they are given that, this issue can be largely settled once and for all. The politics, economics, and administration of such a choice clearly favors a transition, not a revolution.

• Taxes 

  Yet another easy subject that comes up in every election. Just kidding, folks. Again, assuming Democratic wins (not a sure thing, of course) I would expect most of the bad tax legislation and administrative rulings done by Trump and Company to be repealed. But there might be a case for doing this with some deliberation as well. The business sector does not take well to upheaval.

  Expect some long overdue tax increases for higher incomes, the deletion (finally!) of the earned interest tax loophole and raising the ceiling on income taxable for social security. All good and necessary steps. Some small demonstration of a wealth tax would be welcome, given the severe imbalances in wealth distribution in America today, but unless Elizabeth Warren is the VP, this seems less likely. In normal times, I would not be much on a wealth tax, but the imbalance is so bad now, such a remedy deserves consideration. We have not been this far out of balance since the Great Depression.

• Multi-Lateral Trade Treaties

  I am going to be something of the Odd Man Out here. It is my view thattoo many politicians have been stampeded into opposing multi-lateral trade deals. That is a mistake. Many rail against the downsides of globalization and blame these treaties. I think the more accurate perspective is that such trade patterns are going to happen regardless of such deals. These trade deals give us some level of control we would otherwise lack. They are treaties, which means they are negotiated. That means we will not get everything we want, but can make good progress on the issues we think most important

  Want proof? After years of moaning about NAFTA, a new deal was negotiated. It changes about 5% of the original deal. Pretty much every leading candidate said they would support it, except Sanders. Sanders, of course, sees this as an ideological matter; he will never support any multi-lateral deal.

  In an odd way, Sanders and Trump are partners in opposing such deals. The neo-isolationism and reliance on tariffs that Trump favors have proven to be one economic disaster after another. Let’s get back to leading international trade, starting with a return to the Pacific Trade matters, now being led by China in our absence.

• Economic Competency

  Finally, look for a novel concept in recent years: trade and economic matters run by actual experts. It has been both depressing and amusing to watch Trump fill out the roster for his economic team. It is led by a Fox commentator. The proposed next member of the Federal Reserve believes William Jennings Bryant had it right – we should return to the gold standard. Meanwhile, real experts are ignored or are leaving government service in droves. Many positions are simply vacant.

  As we enter the likely recession now coming along, it will be painfully obvious that this is the gang that could not shoot straight. Let’s hear a cheer for bringing back real competence. And while we are at it, let’s recognize that business expertise is important, but it is NOT the same thing as economic and trade expertise. We deserve better than what we have today.

         Bill Clontz

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